Ex-Synthes executive Huggins gets 9 months in jail

PeterLoftus

PHILADELPHIA (MarketWatch) -- A former Synthes Inc. (SYST.VX) executive was sentenced to nine months in prison for his role in the medical-device maker's promotion of a bone cement for unauthorized uses.

U.S. District Court Judge Legrome Davis sentenced Michael D. Huggins, who was chief operating officer of Synthes, to nine months in federal prison Monday morning, according to a spokeswoman for the U.S. Attorney's Office in Philadelphia. Huggins was the first of four former Synthes executives scheduled to be sentenced Monday.

The sentence is likely to be viewed as a victory for the Justice Department, which has stepped up efforts to hold individual executives criminally responsible for corporate violations of food and drug laws.

The Justice Department had asked Davis to sentence Huggins and three other former Synthes executives to prison for up to a year, partly to serve as a deterrent to other health-care industry executives.

Lawyers for Huggins and the other executives had argued that prison terms would be excessive, and that probationary or fine-only sentences are sufficient. Each of the former executives pleaded guilty in 2009 to a misdemeanor charge of shipping adulterated and misbranded bone cement into interstate commerce, and agreed to pay the maximum fine of $100,000.

Synthes and its Norian unit agreed last year to plead guilty to charges that between 2002 and 2004 they conspired to conduct unauthorized clinical trials of the Norian bone cement in surgeries to treat vertebral compression fractures of the spine, a type of fracture that often occurs in the elderly.

The prescribing label for the Norian bone cement, however, specifically warned against using it for vertebral compression fractures, due to concerns it could cause dangerous blood clots. The cement was approved to fill bony voids or defects that weren't essential to bone stability.

Three patients died on the operating table after spine surgeons used the Synthes product in 2003 and 2004. The Department of Justice hasn't proved that the cement caused the deaths, but the agency has said the deaths should have raised red flags at Synthes about the product's safety risks.

To settle the corporate charges, Synthes and Norian agreed to pay $23.2 million in fines, and Synthes sold Norian to Kensey Nash Corp.
KNSY
Synthes, which has its headquarters in Switzerland and has major operations in the Philadelphia suburbs, has agreed to be acquired by Johnson & Johnson
JNJ, +1.14%
for about $21 billion in a deal expected to close next year.

In addition to Huggins, the former Synthes executives facing sentencing Monday are: Thomas B. Higgins, former president of the Synthes spine division; Richard E. Bohner, former vice president of operations at Synthes; and John J. Walsh, former director of regulatory and clinical affairs in the Synthes spine unit.

The four men pleaded guilty under the so-called responsible corporate officer doctrine. Under this doctrine, corporate officers can be found criminally liable if they held positions of authority in which they could have prevented or promptly corrected an alleged corporate violation, but failed to do so.

The doctrine is controversial, however, because it doesn't require proof that a corporate officer had knowledge or awareness of the alleged wrongdoing.

The Justice Department alleged in court papers that in the Synthes case, the men were aware of and participated to some extent in the underlying criminal conduct, and that their conduct caused harm to the public.

"Due to the egregious facts of this case, the Court could and should consider whether a sentence of imprisonment up to the statutory maximum of 12 months would be appropriate," the U.S. attorney's office said in a court filing earlier this year. One year in prison would be above the federal sentencing guidelines of up to six months imprisonment.

But defense lawyers said in court filings that prison terms would be unusual and extraordinary for executives who have pleaded guilty to misdemeanors under the responsible corporate officer doctrine.

Lawyers for Huggins--the highest-ranking of the former executives--acknowledged in a court document he "failed to heed warning signs concerning Norian's use in the spine" and "is painfully aware that three patients died during operations involving Norian."

Huggins' lawyers also said the evidence in the case "shows that Mr. Huggins committed a serious offense but does not show the sort of intentional misconduct that the government has alleged in this case."

Huggins' lawyers say a sentence of probation is sufficient because he accepted responsibility for his conduct, agreed to the fine, and his career in health care is over.

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